Correlation Between Continental and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Continental and Boston Beer at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Continental and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camden Property Trust and The Boston Beer, you can compare the effects of market volatilities on Continental and Boston Beer and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Continental with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Boston Beer.
Diversification Opportunities for Continental and Boston Beer
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Continental and Boston is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Camden Property Trust and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Continental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Camden Property Trust are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Continental i.e., Continental and Boston Beer go up and down completely randomly.
Pair Corralation between Continental and Boston Beer
Assuming the 90 days horizon Camden Property Trust is expected to generate 0.75 times more return on investment than Boston Beer. However, Camden Property Trust is 1.34 times less risky than Boston Beer. It trades about -0.01 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.22 per unit of risk. If you would invest 11,197 in Camden Property Trust on December 12, 2024 and sell it today you would lose (197.00) from holding Camden Property Trust or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camden Property Trust vs. The Boston Beer
Performance |
| Timeline |
| Camden Property Trust |
| Boston Beer |
Continental and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Boston Beer
The main advantage of trading using opposite Continental and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Boston Beer can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Boston Beer will offset losses from the drop in Boston Beer's long position.| Continental vs. The Boston Beer | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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